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The Lottery Exposed
By Jon Menaster | March 8, 2007
As we are all transfixed on the extremely exciting Mega Millions lottery jackpot (a record $370 million) I thought it would be interesting to see just how much money gets spent on lottery tickets.
Most people think that lottery tickets are a fun, exciting way to spend a buck or two – “Maybe I’ll strike it rich” or “Why not, it’s just a dollar” are two common thoughts that run through people’s minds when purchasing that pretty ticket through that all too easy to use machine (or even from that person! But don’t worry, those days are numbered, human interface is a thing of the past). But what are your odds of winning the lottery, and how else could that money have been spent?
According to Mega Millions Web Site, your odds are 1 in 176 MILLION. Those are some rough odds, if I do say so myself. (The odds of getting killed by lightning in the US are 1 in 3 million)
If you spend $1 a day on a lottery ticket, so $365 a year, every year from say 21 to 60, you would have spent $14,235 over the course of your life on lottery tickets. Using the magic of compounded interest, if you have invested $365 a year and received returns around 8% (not an unreasonable figure over a 39 year period in the stock market), you would end up with $101,532.71 (before taxes).
So which would you rather be – $14,235 poorer while holding onto a dream, or $101,532.71 richer and ready to enjoy that money at retirement?
My friend Dan used to tell me, and I quote, “I always thought the lottery was a tax on stupid people”. Couldn’t have put it better myself.
Topics: Money News, Retirement, Savings | 23 Comments »